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  • Malaysia's High-Tech Future Appears Imperiled
  • November 23, 1998 (KUALA LUMPUR) -- Malaysia faces doubts about the viability of its Multimedia Super Corridor (MSC) project, following intense international scrutiny and amid the worst political and financial crises in its recent history.
    Author Alvin Toffler, a member of the MSC's international advisory panel, castigated Prime Minister Mahathir Mohamad for perpetuating a "climate of political repression" that he says will stifle the project.

    "I do not believe that this visionary project, which is important for the future of the Malaysian people and serves, in part, as a model and challenge to other countries, can flourish in the present climate of political repression," he said in a statement issued to Asia BizTech.

    He noted that other members of the panel, including executives of major software, computer and telecom companies, shared his view.

    Toffler said that contrary to earlier reports in the press he had not formally resigned from the 45-member panel, although he had written a letter to Mahathir voicing his concerns.

    Toffler said in a prepared statement he still held hopes that "even at this late date a calm and just resolution can be found to the conflict between those calling for reform in Malaysia and a once visionary prime minister."

    Toffler was referring to a reform movement started by political rival Anwar Ibrahim, who was fired as deputy prime minister and finance minister and arrested after leading an unprecedented anti-government protest rally on Sept 20.

    Following Anwar's arrest, four people also were charged with spreading rumors via the Internet of bogus riots. Authorities claimed they were "monitoring" the many Web sites that had sprung up mostly in favor of the reform movement, which denounced nepotism, collusion and cronyism in the highest levels of government.

    Anwar also had been the deputy chairman of the National Information Technology Council, the main policy-making body for Malaysia's information technology agenda, including the MSC.

    Due to the recession, the first in 13 years, Anwar deferred mega-projects favored by Mahathir including parts of the MSC in what was seen as International Monetary Fund-style austerity measures.

    At issue was Putrajaya, the new administrative capital, which was to be the center of an experiment in electronic government, a key part of the MSC. Anwar sought to delay its second phase as the costs spiraled for the first phase of Putrajaya as well as the building of the so-called "twin intelligent city" Cyberjaya, which would host the investing MSC companies.

    "If Anwar and his former speech writer Munawar Anees are not released from prison unharmed as soon as possible, I will resign, as, I suspect, will other members of the panel on whose investments the project depends," Toffler said.

    He was invited to become a member of the panel, which advises the prime minister on the strategic direction of the project, in 1996.

    The high-profile panel, which includes Microsoft Corp. chairman Bill Gates, and Sun Microsystems Inc. chairman Scott McNealy, had met twice, once at Stanford University, in California in January 1997, and at Cyberjaya, near Kuala Lumpur, in February 1998.

    Toffler did not attend either of the meetings, but he praised Mahathir and the project when he visited Malaysia in August.

    He has since reversed his views following Anwar's arrest. In his statement, Toffler also rebutted Mahathir's contention that the MSC project is "purely a business matter and has nothing to do with politics."

    "The cyberlaws that he promised investors -- complete with freedom of access to information, and other Third Wave freedoms, are, in fact, clearly political. The creation of an Asian Silicon Valley is itself inherently political," he said.

    Toffler's statements follow U.S. Vice President Al Gore's comments on the eve of the Asia Pacific Economic Cooperation (APEC) Summit, on Nov 16.

    Gore endorsed ongoing pro-democratic demonstrations in the capital city when he told business leaders at a dinner, "among nations suffering economic crisis, we continue to hear calls for democracy in many languages."

    When Mahathir unveiled the project in August 1996, he described it as an experiment to test new roles of government, new cyberlaws and "collaboration between government and companies."

    MSC International Advisory Panel member Robert Madge, chairman of Madge Networks Ltd., said he agreed with Toffler that the success of the MSC depends on having "a climate of openness."

    "Perhaps more importantly it has to have a stable legal and economic environment and avoid, for example, unexpected regulations on the flow of capital," he noted.

    Madge referred to Mahathir's insulation of the economy from "rogue currency traders" by introducing indefinite currency controls on Sept 1. Mahathir's move rendered the ringgit non-convertible outside Malaysia, and barred short-term capital inflows.

    "The official government strategy to accelerate its move into the information age is absolutely the right course for the country, since its future wealth will depend on the speed by which it adopts information technology and becomes a leader in this area," he said.

    IBM Corp. chairman Louis Gerstner and Intel Corp. CEO Craig Barrett, who also are panel members, both indicated to Asia BizTech that their companies are in the project for the long haul regardless of current political events.

    Both companies have operated facilities in Malaysia for over 25 years and pledged fresh investments for the MSC project.

    Madge said it would be a mistake, and unnecessarily damaging to Malaysia, to take the extreme view and halt all projects receiving foreign investment or other foreign involvement until the current political situation is resolved.

    However, skeptics continue to question how a country with chronic shortage of skilled labor, little software expertise, and an overly sensitive government that constantly berates the foreign media and censors magazines and films prior to distribution, could implement such an ambitious project.

    "Having invited the world to embrace the project, the government must also accept opposing views by those who fear it has veered off course," said one investor who has received MSC status. The investor spoke on the condition that his company not be identified for fear of reprisal.

    The investor said that the MSC's investment policies are geared toward attracting large multinational companies that may have the financial clout to set up shop in the MSC, but which won't risk developing world-changing intellectual property in the middle of a palm oil estate.

    "The companies may get MSC status but their objectives were merely to set up training-oriented investments that would complement existing low-wage, high-volume manufacturing operations in the country," he said.

    He also noted that foreign venture capitalists who may have been interested in the MSC, have all been spooked by the country's capital controls.

    "Local venture capitalists do not even want to invest in companies without at least five-year track records, and there is no culture here of long-term financial support for technology and research," he added.

    The investor was in agreement with media marketing expert Jim Mann who in a recent book entitled "Tomorrow's Global Community" has stated that the new knowledge-based economy must "promote the free exchange of ideas and encourage cooperation, openness and trust rather than secrecy and suspicion."

    Mann predicted that both in the private and public sectors, top-heavy, centralized bureaucracies will end in favor of global communities and consensus decision-making.

    His words may be indicative of how far removed Malaysia is from achieving its dream for a knowledge-based economy.

    (Julian Matthews, Asia BizTech Correspondent)

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    Updated: Sat Nov 21 23:37:08 1998 PDT